Deere quarterly profit, sales surge

AugustCole

SAN FRANCISCO (CBS.MW) -- Deere & Co. shares rallied almost 5 percent Tuesday after the company reported results that were much stronger than Wall Street forecast, due to cost cutting and improving demand for agricultural equipment.

First-quarter earnings totaled $170.8 million, or 68 cents a share, up from $68 million, or 28 cents a share, last year. Profit from the company's credit operations also rose.

Revenue came to $3.48 billion, up 25 percent from $2.79 billion last year. Agricultural equipment formed the bulk of the company's sales while construction and forestry equipment sales rose strongly from the prior year.

Analysts, according to Thomson First Call, forecast a per-share profit of 52 cents and revenue of $2.74 billion.

"All equipment divisions are benefiting from improving market conditions and continued positive customer response to our products," said CEO Robert Lane in a statement.

The Moline, Ill.-based company also said it expects sales growth of 18 percent to 20 percent in the current fiscal year, with net income of $900 million to $1 billion. The new outlook is above the company's earlier range of $750 million to $850 million, according to J.P. Morgan Securities' Gary McManus, who kept his "overweight" rating on the stock.

Citigroup Smith Barney's David Raso upgraded Deere shares to "hold" from "sell" after the report and also raised the earnings estimates for the company. "Thus we are belated raising our rating on Deere from a 'sell' to 'hold,' supported not just by this morning's report but other recent field work that support Deere's improved outlook," he wrote.

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